Consultations and proposed amendments
On 17 August 2012, the Minister for Defence, the Hon Stephen Smith MP
(the minister), issued a media release thanking the committee for its
preliminary report on the bill. The minister announced that he had appointed Mr
Ken Peacock AM and the Chief Defence Scientist, Dr Alex Zelinksy, to conduct
further consultations on the bill.
After consulting with key stakeholders, Mr Peacock and Dr Zelinksy prepared
a report outlining possible amendments to the bill and implementation options. They
also presented issues raised during the consultation and proposed possible
solutions in order 'to stimulate discussion and feedback'.
In their report, they noted that as a result of consultations commenced in
February 2012 several changes had been proposed to the legislation, the most
removing the control of 'defence services', which would have
regulated a broader range of teaching and research activities;
- removing controls on transfers inside Australia, which would have
regulated all transfers to foreign students and employees in Australia;
removing controls for Australians located overseas who supply
- including exemptions for 'in the public domain' and 'basic
scientific research' in the Bill if possible.
The report also noted that Defence proposed to recommend to government
additional amendments to the bill such as establishing a 12–24 month transition
period for strengthened export controls after passage of the legislation. Other
recommendations included establishing an advisory group to advise government on
implementation issues during the transition period and conducting a
comprehensive pilot program during this period.
On 13 September 2012, the minister wrote to the committee providing a
copy of the report. He indicated that:
The Government in-principle supports the proposals in the
report, with the exception that the Bill not be returned to Parliament until
re-drafting of the Regulations is completed...The Government will continue to engage
with stakeholders throughout the implementation process, including with regard
Mr Peacock and Dr Zelinksy's report was to serve as a consultation paper
for discussion with the university and research sectors on proposed further
amendments to the bill.
Recommendation 6 of the committee's preliminary report supported
Universities Australia's proposal for a roundtable to be conducted to allow all
stakeholders to discuss openly amendments to the bill.
This recommendation was subsequently taken up. At this stage it should be noted
that the main concern, as described by Universities Australia, was that:
...a Bill designed to support and reduce administrative burden
on defence trade has the potential to substantially increase the regulatory
burden on a range of civilian innovation activities, with an as yet unknown
effect on research in health, agriculture, mining, manufacture and trade.
The University of Sydney, Universities Australia, and the Chief Scientist
informed the committee that two roundtables, convened by the Chief Scientist,
Professor Ian Chubb, were conducted with all stakeholders and Defence. They
were held on 6 September and 21 September 2012. The roundtable participants
included Dr Zelinsky and representatives from Universities Australia, the
University of Sydney, the Academy of Technological Sciences, Australian Academy
of Science, the Cooperative Research Centres Association, Department of
Defence, DIISRTE and a number of other relevant Commonwealth agencies.
On 28 September, Professor Chubb wrote to the committee about the
roundtable process. He described the discussions as fruitful and informed the
committee that the parties had reached 'an agreed path forward'.
Professor Chubb noted that some representatives from the university sector
still held reservations about the timing of the legislation. He was confident,
however, that the approach agreed between all stakeholders would be a workable
It has been noted by some representatives of the university
sector that in their view a pilot study should precede the enacting of the
legislation, not follow it, to enable results from the pilot to inform the
final legislation. In my view, the current proposal involving exemptions,
legislation with provisions for a transition period, a pilot and a Steering
Group with its final advice tabled by Ministers is quite workable. If issues
with the Bill are identified through the pilot, the legislation can be amended
at a later stage to address these issues. The Steering Group may also recommend
to the Ministers that the transition period be extended.
Outcome of the roundtable discussions
As noted above, Professor Chubb advised the committee that he was
satisfied that a workable solution had been reached through the roundtable
In my view, the amended Bill is a significant improvement on
the original, addressing key concerns initially identified by the sector. It
does give institutions a very substantial role in managing the process. The
inclusion of the transition period, pilot study, and the Steering Group should
alleviate many of the sector's concerns and act to help minimise any
administrative impacts over time.
In his correspondence to the committee, Professor Chubb provided a copy
of the list of agreed outcomes from the roundtable discussions.
- Establish the Strengthened Export Controls Steering Group,
reporting to the Minister for Defence and the Minister for Tertiary Education,
Skills, Science and Research (the Ministers).
- A transition period of at least 24 months with no offence
provisions in effect. The Steering Group may recommend an extension to this
non-offence provision transition period.
- A pilot program (not limited to a single pilot) to test the
regulatory impact of the regime.
- The pilot to determine the costs and benefits associated with the
regime, the feasibility of its implementation, the processes and interaction
required to successfully implement the bill during the transition period, and
identify any aspects that require modification prior to the offence provisions
coming into full effect.
- The framework for the pilot to be agreed by the Steering Group
and, pending consideration of the Steering Group, will span two grant funding
cycles with interim reporting to identify improvements.
- The pilot will review mechanisms by which organisations can
determine thresholds for technologies assessments beyond which an organisation
will consult with Defence and, if required, seek a permit.
- Internal institutional practices and structures (including a
supplement to the Australian Code for the Responsible Conduct of Research) to
be developed to reduce the need to interact with Government agencies on the
- The Model to be tested as part of the pilot will consist of an
export control regime that:
- Begins with an institutional assessment process for open
academically based research in accordance with guidelines incorporated into the
supplement to the Australian Code for the Responsible Conduct of Research. This
step recognises that not all activities to supply technology to 'develop',
'produce', or in comes cases 'use', an item on the DSGL will involve the level
of detail which is peculiarly responsible for achieving or extending the
controlled performance levels, characteristics or functions of the DSGL listed
item. The institutions involved in activities of this type must have processes
for assessing technology and for determining when advice is to be sought from
Defence about a possible permit in accordance with established guidelines.
- Provides exemptions from export controls for research, where:
- The activity is 'basic scientific research', as defined in the
DSGL and Wassenar Arrangements (Experimental or theoretical work undertaken
principally to acquire new knowledge of the fundamental principles of phenomena
or observable facts, not primarily directed towards a specific practical aim or
- The technology is already 'in the public domain', as defined in
the DSGL (technology or software which has been made available without further
restrictions upon its further dissemination (copyright restrictions do not
remove technology or software from being in the public domain))
- Provides exemptions for transfers of technologies within
Australia's domestic borders.
Participants in the roundtable discussions agreed that the following be
incorporated into the bill:
- Modification, if necessary, once the results of the pilot studies
- A non-offence transition period of no less than 24 months, and
with the possibility of an extension on the recommendations of the Steering
- Pilot studies governed by the Steering Group.
- Pilot studies to test the outcomes from the Model.
- A formal evaluation against agreed criteria to include outcomes
of pilot studies.
- A final report from the Steering Group to be submitted to the
Ministers to be tabled in Parliament.
- Ordinary scientific communication is permissible, where the
institution and individual have complied with established guidelines which
include the institutional assessment model outlined above.
- The provisions relating to Defence Services are deleted.
- Controls on foreign employees and students in Australia are
- Controls on Australians overseas are removed.
The committee notes that in his submission of 13 September 2012, the
minister advised that the government in-principle supports the proposals in Mr
Peacock and Dr Zelinksy's report,
which included exemptions for 'in the public domain' and 'basic scientific
The Chief Scientist lists amongst the key developments agreed at the roundtable
'exemptions for basic scientific research and for information already in the
Response by the university sector
On 4 October 2012, the committee received a supplementary submission
from the University of Sydney regarding their concerns about the amendments and
implementation arrangements discussed during the roundtables. Professor
Jill Trewhella wrote that:
Regrettably, notwithstanding the welcome but largely
procedural improvements that have been achieved in a very short timeframe
through the roundtable discussions facilitated by the Chief Scientist in
September, our key concerns remain largely unchanged...The only comfort
provided to the sector from the roundtable process is a commitment to address
the unintended consequences of the legislation by extraordinary post
legislation procedural concessions...
The University of Sydney noted that during the roundtable discussions a
difference of opinion arose between Defence and the university sector regarding
the scope of export controls as they apply to US universities. Endeavouring to
understand the scope of the export control regimes applying to researchers in
the US, the university sought independent advice from a law firm in Washington.
The university suggested that the committee consider the scope of the proposed
exemptions for research in the bill in the context of the exemptions provided
for research under US law. It was seeking to bring the Australian legislation
into alignment with the US system of export controls which would 'also serve to
streamline the currently proposed complex post legislation requirement'.
Sydney University recommended that the bill be amended sufficiently:
...to ensure that the resulting control regime is no broader
in scope or more stringent than the arrangements in place for fundamental
research in accredited institutions of higher learning in the US.
The University of Sydney was of the view that this proposition had broad
The committee considers the request of the University of Sydney to be
fair and reasonable: the effect of the bill should not place Australian
universities and research organisations at a disadvantage compared to their
counterparts in the US.
Universities Australia also identified the coverage of the legislation
as a substantial concern. It was concerned particularly about:
...the risk that the Australian legislation imposes, or is
interpreted so as to impose, greater restrictions on Australian universities
and researchers than are applied in the United States.
In its view, Australian researchers 'should be subject to similar but
not more severe regulatory constraints than their US counterparts'. For Universities
Australia this matter was one requiring 'priority attention'.
The committee understands the universities' call for the bill to take
account of the legislation governing similar institutions in the US and
supports their stand that Australian legislation should not impose heavier
burdens. In this regard, the committee suggests that the government be guided
by this principle when drafting amendments to the bill.
Universities Australia noted that the roundtable process had addressed
many of the concerns raised by the universities and that they supported
amendments to the bill which reflect the agreed outcomes of the roundtable. It
advised the committee, however, that the sector had some remaining concerns
about the impact of the legislation. The outstanding issues include:
that the scope of the legislation provides greater restrictions
on research activity than similar legislation in the US;
- effect of the bill on 'Freedom of inquiry';
- development of self-assessment processes;
publication of research and criminal penalties in the bill;
- additional risks and costs incurred as the new regime is
effect on Australia's ongoing engagement in international
The committee notes that many of these unresolved issues will be tested
in the 24 month pilot program contained in the list of agreed outcomes from the
round table. The committee relies upon Defence to commit to and implement
expeditiously any amendments which are proposed from the pilot program.
The committee notes the pilot program will be complex, and will result
in proposals to amend the bill. The committee believes it would be premature
for any government amendments to the bill in 2012 to be made contrary to any agreements
reached during the roundtable.
Importance of transition period
Clearly, Universities Australia still holds significant concerns about
the effect of the legislation as currently framed on Australia's research
capacity, and the social and economic benefits that flow from it. Even so, it was
of the view that should the bill proceed, it would support the incorporation of
amendments that 'fully and accurately reflect the outcomes of the roundtable
discussions' as a means of 'mitigating, at least partially, the risks to
Australian research posed by the scheme'.
It recommended that:
...should Parliament pass amended legislation, the minimum two
year transition period must enable outstanding concerns to be examined and
addressed prior to the full impact of the legislation coming into effect.
It should be noted that Universities Australia stressed that outstanding
concerns not addressed during the roundtable process 'must be dealt with
substantively in the trial phase and under the auspices of the Steering Group'.
Universities Australia highlighted the central importance of the transition
It is critical, therefore, that the proposed minimum two year
transition period is enacted and facilitates a thorough and robust assessment
of the impact of the legislation on defence trade, the effectiveness and
efficiency of the control regime, and also the conduct and output of Australian
The committee fully endorses this view.
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